Iraq is planning to issue bonds in local currency (http://pukmedia.com/AR_Direje.aspx?Jimare=23525)

12/11/13 23: 59: 00

http://pukmedia.com/Wenekan_AR/24582312112013_download.jpg
His is the client after receipt of television, the Rafidain Bank in Baghdad

The Central Bank announced plans to issue bonds in local currency for the first time since the liberation of the country in 2003, which will provide a new tool for monetary policy.

He said Abdel Basset Turki Saeed, the Governor of the Central Bank told Reuters on the sidelines of a Conference in Geneva that the first tranche of bonds are expected to amount to three billion dinars (2.58 million US dollars).

He added that this will be the first time that a bond issue for fiscal policy and not for the purpose of funding.

He said he expected that the first version of the new bonds will be a good response and may be followed by more releases and the total size of the issue will depend on demand.

It will increase the bond order for five years and hopes the Central Bank issued the first tranche before the end of the year, although that decision will be taken with the participation of the Ministry of finance.

He said that the bond interest is expected to be less than the standard interest rate of the Central Bank of 6 percent.

He said Iraq's inflation rate of 2 percent describing it as a rare and very good number.

He said there were no plans to issue international bonds even though that might happen in the future if there are ambitious plans for the development of needed funding.

Hue Mi

11-13-2013, 11:34 AM

Iraq Plans Bond as 3.3 Million Barrels a Day Gushes: Arab Credit (http://www.bloomberg.com/news/2013-10-24/iraq-plans-bond-as-3-3-million-barrels-a-day-gushes-arab-credit.html)

By Nayla Razzouk - Oct 24, 2013 5:36 AM GMT-0800

Iraq plans to sell bonds for the first time since 2006 as surging oil revenue pushes borrowing costs lower even as sectarian violence in the nation escalates.

“We formed a committee to decide on the details for the bond issue, which will most probably be of medium- to long-term maturity,” Deputy Finance Minister Fadhel Nabi said in an Oct. 22 phone interview from Baghdad. “The joint committee from the Finance Ministry and the central bank will also decide on the timing, which can be within a year,” he said, declining to give more details.

http://www.bloomberg.com/image/i_PXRvLnz7z4.jpg
An oil refinery stands in Kirkuk, north of Baghdad. Iraq is pumping 3.3 million barrels a day amid attacks that killed more people in the first nine months of this year than in all of 2012. Photographer: Marwan Ibrahim/AFP/Getty Images

Iraq, with the world’s fifth-largest oil reserves, boosted income from crude sales by 23 percent from June to August and earned $6.5 billion in September, data compiled by Bloomberg show. The country is pumping 3.3 million barrels a day amid attacks that killed more people in the first nine months of this year than in all of 2012. Government debt as share of gross domestic product should drop to 25 percent this year from about 800 percent a decade ago, Standard Chartered Plc (STAN) said Oct. 20.

The extra yield investors demand to hold Iraq’s dollar bonds rather than Treasuries has tumbled 143 basis points, or 1.43 percentage points, since this year’s June 25 peak to 510 basis points today, according to JPMorgan Chase & Co.’s EMBI Global indexes. The spread between Treasuries and Middle Eastern bonds narrowed by 37 basis points in the period.

Attractive Yield

“Iraq’s yield is very attractive, underpinned by strong government finances and a fiscal position,” said Ahmad Alanani, Dubai-based director for the Middle East at Exotix Ltd. “I’d take Iraq risk today over some of the more vulnerable places in the Middle East.”

The yield on Iraq’s 5.8 percent dollar bond maturing in January 2028 dropped to 7.277 percent today from a high for this year of 8.803 percent on June 24, according to data compiled by Bloomberg. The bond began trading at about 9 percent in 2006.

Iraq issued $2.7 billion in securities to help restructure debt accumulated during the era of former President Saddam Hussein. The bond is the country’s only dollar-denominated debt and equates to about 1.2 percent of 2012 gross domestic product, Geoffrey Batt, managing director of the $82 million Euphrates Iraq Fund, said in an Oct. 22 e-mail.

“It’s tiny compared to Iraq’s financial resources, and there’s little doubt the country can meet its obligations,” he said.

Easier Borrowing

As government borrowing continues falling as a share of GDP, Iraq may find it easier to return to capital markets, particularly for long-term infrastructure projects, Standard Chartered said in its report this week.

Nabi, the deputy finance minister, confirmed in his interview that Iraq’s next bond would help pay to rebuild infrastructure damaged by decades of war and sanctions.

Even so, the government’s plan for a second bond is less than certain. Iraq said more than two years ago, in July 2011, that it would come to market in a year.

Detection of the Iraqi Central Bank Governor Abdel Basset Turki said, that Iraq is planning to issue bonds in local currency for the first time since the overthrow of Saddam Hussein, which would give the country a new tool of monetary policy.

He said the "Reuters" on the sidelines of a Conference in Geneva Tuesday that the first tranche of bonds are expected to amount to three billion dinars (2.58) million.

The Governor of the Central Bank, he said: this will be the first time that a bond issue for fiscal policy and not for the purpose of funding.

He continued: it is expected that the first version of the new bonds will be a good response and may be followed by more releases and the total size of the issue will depend on demand.

It will increase the bond order for five years and hopes the Central Bank issued the first tranche before the end of the year, although that decision will be taken with the participation of the Ministry of finance.

He said: the bond interest is expected to be less than the standard interest rate of the Central Bank (6%), indicating that the rate of inflation in Iraq (2%), calling it a rare and very good number.

He stated: there are no plans to issue international bonds even though that might happen in the future if there are ambitious plans for the development of needed funding.